Unsurprisingly, malls in the Greater Toronto Area have been struggling for a while. The Honeydale, Morningside, and Galleria Malls are all examples of decaying retail centres that lost their largest tenants and could not stay afloat. Recently, developers have considered buying vacant or struggling malls and reimagining them as mixed-use centres, with housing as an integral part of the redevelopment.
Let's consider how this would work, why developers are contemplating the idea, and whether this could benefit real estate investors.
How To Save a Mall
The Square One Shopping Centre in Mississauga is the largest mall in the province and is currently under redevelopment, according to the co-owner of the mall, Oxford Properties. The mall's redevelopment will eventually include 18,000 residential units and a green space for the local community. The mall itself will remain intact.
Some struggling malls, like Square One, are good options for partial reimagining. The mall may have robust retail options but needs less floor space and an infusion of people to shop. By creating residential units under the same roof, both things will happen: stores will get a financial boost, and floor space can be reduced.
Some malls are less fortunate than Square One. While Square One is still open, other malls shut down completely. The Galleria Mall was memorialized in an artist's book as the "Mall That Time Forgot." Having gone through many iterations, the mall is now being under redevelopment. Similarly, Cadillac Fairview will redevelop the Fairview Mall. The Fairview Mall is expected to become mixed-use with retail, amenity, and residential spaces.
Why Add Residential Units To A Mall?
Ontario is in the midst of a housing crisis. In the GTA, 1.5 million homes are needed to house the population. Unfortunately, the issue cannot be solved quickly as there is a lack of labour to complete the projects.
"Data from RESCON shows 96,000 homes were started last year, well over 50,000 short of the annual targets needed for the province to fulfill its promise. It isn't just affecting the construction of new homes. Contractors are turning down work in every facet of the industry, including restoration, industrial, institutional and commercial, and renovations." (cbc.ca)
By redeveloping malls to include residential units, the city is tackling multiple problems at once:
Labour costs are lessened by joining commercial and residential construction.
Traffic issues are solved by providing more mixed-use spaces where residents can walk to work and shops.
Dead spaces bringing down home prices and weakening the local microeconomy will be reimagined, and home prices will go up. Trends show that crime rates go down in areas of good economy, and school ratings go up.
Is Mall Redevelopment/ Reimagining Good for Real Estate Investors?
Reimagining the malls across the GTA means creating thousands of new residential units. It also means sprucing up certain areas that may need to be revised. This will attract more people to the region, and Ontario will strengthen its reputation as a vibrant location for people to live, work, and play. This is a real estate investor's dream! As long as you can jump in soon!
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